§ 12-6-3375 — Tax credit for port cargo volume increase; application to council; definitions; excess credits; taxpayers without distribution centers in the State; failure to meet requirements.

South Carolina § 12-6-3375

• Jurisdiction: South Carolina
• Title 12: TAXATION
• Ch. 6: SOUTH CAROLINA INCOME TAX ACT

Text

(A)(1) A taxpayer engaged in any of the following: manufacturing, warehousing, freight forwarding, freight handling, goods processing, cross docking, transloading, wholesaling of goods, or distribution, exported or imported through port facilities in South Carolina and which increases its port cargo volume at these facilities by a minimum of five percent in a single calendar year over its base year port cargo volume is eligible to claim an income tax credit or a credit against employee withholding in the amount determined by the Coordinating Council for Economic Development (council). (2) The maximum amount of tax credits allowed to all qualifying taxpayers pursuant to this section may not exceed fifteen million dollars for each calendar year. The credits may be claimed against the taxes imposed pursuant to Sections 12-6-530 and 12-6-545 and against employee withholdings. The council has sole discretion in allocating the credits provided by this section and must consider the following factors: (a) the amount of base year port cargo volume; (b) the total and percentage increase in port cargo volume; and (c) factors related to the economic benefit of the State or other factors. (3)(a) If the income tax credit exceeds the taxpayer's income tax liability for the taxable year, the excess amount may be carried forward and claimed against income taxes in the next five succeeding taxable years. (b) If the credit against withholding taxes exceeds the taxpayer's withholding tax liability for the taxable quarter that is not otherwise refunded under Title 12 of the 1976 Code, the excess amount may be carried forward and claimed against withholding liability that is not otherwise refunded under Title 12 of the 1976 in the next twenty succeeding taxable quarters. (B)(1) For every year in which a taxpayer claims the credit, the taxpayer shall submit an application to the council after the calendar year in which the increase in port cargo volume occurs. Allocations of the credit may be made on a monthly, quarterly, or annual basis. The taxpayer shall attach a schedule to the taxpayer's application to the council with the following information and information requested by the council or the department: (a) a description of how the base year port cargo volume and the increase in port cargo volume was determined; (b) the amount of the base year port cargo volume; (c) the amount of the increase in port cargo volume for the taxable year stated both as a percentage increase and as a total increase in net tons of non-containerized cargo, measurement of cargo, and TEUs of cargo, including information which demonstrates an increase in port cargo volume in excess of the minimum amount required to claim the tax credits pursuant to this section; (d) any tax credit utilized by the taxpayer in prior years; and (e) the amount of tax credit carried over from prior years. (2) To receive the credit the taxpayer shall claim the credit on its income tax or withholding return in a manner prescribed by the department. The department may require a copy of the certification form issued by the council be attached to the return or otherwise provided. (C) As used in this section: (1) "TEU" means a twenty-foot equivalent unit; a volumetric measure based on the size of a container twenty feet long by eight feet wide by eight feet, six inches high. A "weighted TEU" is equal to seven and one-half tons. A "measured TEU" is equal to thirty-eight and one-half cubic meters. (2) "Base year port cargo volume" initially means the total amount of net tons of non-containerized cargo, measured equivalent of non-cargo or TEUs of cargo actually transported by way of a waterborne ship through a port facility during the period from January first through December thirty-first of the same year. Base year port cargo volume must be at least seventy-five net tons of non-containerized cargo, three hundred eighty-five cubic meters, or ten TEUs for a taxpayer to be eligible for the credits provided in this section. For a taxpayer that does not ship that amount in the year ending December thirty-first of the previous year, including a taxpayer who locates in South Carolina after December thirty-first of the previous year, its base cargo volume will be measured by the initial January first through December thirty-first calendar year in which it meets the requirements of seventy-five net tons of non-containerized cargo, three hundred eighty-five cubic meters, or ten loaded TEUs. Base year port cargo volume must be recalculated each calendar year after the initial base year. (3) "Port facility" means any publicly or privately owned facility located within this State through which cargo is transported by way of a waterborne ship or vehicle to or from destinations outside this State and which handles cargo owned by third parties in addition to cargo owned by the port facility's owner. (4) "Port cargo volume" means the total amount of net tons of non-containerized cargo or containers measured in twenty-foot equivalent units (TEUs) of cargo transported by way of a waterborne ship or vehicle through a port facility, or measured cubic meters of cargo. (D) The council annually may award up to one million dollars of the fifteen million dollars of credits against employee withholdings that are not otherwise refundable pursuant to this title to a new warehouse or distribution facility which commits to expending at least forty million dollars at a single site and creating one hundred new full-time jobs, and the base year cargo may not be less than five thousand TEUs or its non-containerized equivalent. The council may make the award in the year the facility is announced provided that it may not tender the certificate until it has received satisfactory proof that the capital investment and job creation requirements have, or will be, satisfied. Any credit certificate expires three years after issuance if satisfactory proof has not been received. If the credit exceeds the taxpayer's withholding tax liability for the taxable quarter that is not otherwise refundable pursuant to this title, the excess amount may be carried forward and claimed against withholding liability that is not otherwise refundable pursuant to this title in the next twenty succeeding taxable quarters. (E)(1) A taxpayer engaged in the movement of goods imported or exported through South Carolina's port facilities may be eligible for the port volume tax credit if the cargo supports a presence in the State and the taxpayer does not have a distribution center in the State at the time of initial approval of the port volume tax credit, so long as: (a) the taxpayer employs at least two hundred and fifty full-time or full-time equivalent South Carolinians in operations statewide; (b) the taxpayer completes the construction of the distribution facility in South Carolina, and is operational, within five years of the initial approval of the port volume tax credit; and (c) the base year for the taxpayer shall be not less than five thousand TEUs or its non-containerized equivalent. (2) Any credit certificate expires three years after issuance if satisfactory proof has not been received. (F) The council has discretion to award the credits pursuant to either subsection (D) or (E). (G) Notwithstanding Section 12-54-240, the department and the Department of Commerce may exchange information submitted by a taxpayer pursuant to this section. (H)(1) If a taxpayer receives the credit under subsection (D) but fails to meet the requirements of subsection (D) at the end of the three-year period, the taxpayer must repay the department a pro rata portion of the credits claimed. (2) If a taxpayer receives the credit under subsection (E) but fails to meet the requirements of subsection (E)(1) at the end of the five-year period, the taxpayer must repay the department a pro rata portion of the credits claimed. (I)(1) A taxpayer engaged in any of the businesses identified in subsection (A)(1) at a facility located in this State is eligible to claim a port transportation credit or a port volume cargo credit in the form of an income tax credit or a credit against employee withholding in an amount determined by the council in its sole discretion, except that the port transportation credit must be based on the taxpayer's transportation costs. A taxpayer may not claim both the port transportation credit and the port volume cargo credit in the same tax year. (2) For purposes of this subsection, "transportation costs" means the costs of transporting freight, goods, and materials to and from port facilities in South Carolina. (3) The maximum amount of port transportation credits allowed to all qualifying taxpayers pursuant to this subsection is limited to the following amounts of the fifteen million dollars of credits available under this section: (a) one million dollars for the calendar year ending December 31, 2019; (b) two million dollars for the calendar year ending December 31, 2020; and (c) three million dollars for all calendar years after December 31, 2020, until the port transportation credit expires pursuant to item (6). (4)(a) If the allocable port transportation credit exceeds the taxpayer's income tax liability for the taxable year, the excess amount may be carried forward and claimed against income taxes in the next five succeeding taxable years. (b) If the allocable port transportation credit exceeds the taxpayer's withholding tax liability for the taxable quarter that is not otherwise refundable pursuant to this title, the excess amount may be carried forward and claimed against withholding liability that is not otherwise refundable pursuant to this title in the next twenty succeeding taxable quarters. (5)(a) The port transportation credit is allowable to a qualifying taxpayer without regard to whether the taxpayer qualifies for any of the other credits available under this section. A qualifying taxpayer seeking to claim the port transportation credit must submit an application to the council after the calendar year in which the taxpayer seeks to claim the port transportation credit. The application must be made on a form to be prescribed by the council. (b) To receive the credit the taxpayer shall claim the credit on its income tax or withholding return in a manner prescribed by the department. The department may require a copy of the certification form issued by the council be attached to the return or otherwise provided. (6) A taxpayer may not claim the port transportation credit in any tax year after the tax year in which a port in Jasper County is opened and is accepting shipments.

Legislative History

HISTORY: 2005 Act No. 124, SECTION 1, eff June 3, 2005; 2006 Act No. 384, SECTION 6, eff June 14, 2006; 2006 Act No. 386, SECTION 10.A, eff June 14, 2006 applicable to tax years beginning after December 31, 2004; 2010 Act No. 290, SECTION 17, eff January 1, 2011; 2013 Act No. 81, SECTION 1, eff June 13, 2013; 2019 Act No. 37 (S.439), SECTIONS 1, 2, eff May 13, 2019. Code Commissioner's Note 2019 Act No. 37 inadvertently left out item (A)(3), and at the direction of the Code Commissioner, it was reinserted. Editor's Note 2013 Act No. 81, SECTION 2, provides as follows: "SECTION 2. This act takes effect upon approval by the Governor and applies to tax years beginning after December 31, 2013." Effect of Amendment The 2013 amendment rewrote the section. 2019 Act No. 37, SECTION 1, in (A), in (2), in the first sentence, substituted "fifteen million dollars" for "eight million dollars"; and in (D), in the first sentence, substituted "fifteen million dollars" for "eight million dollars" and "the base year cargo may not be less than five thousand TEUs" for "the base year cargo shall not be less than five thousand TEUs". 2019 Act No. 37, SECTION 2, added (I), relating to a port transportation credit.